The following article is a guest post by Christopher Austin.
Are you looking to make an investment and boost your monthly income, but you don’t know where to start? Many people are afraid to invest because they don’t want to lose their money. The truth is, there’s no such thing as a 100% secure investment; nonetheless, there are ideas that work, and as long as you know the market and you deal with a financial advisor, you have great chances of witnessing substantial returns.
US stocks have been in the top this year because they were boosted by the quantitative assistance programs of the Federal Reserve. On the other hand, commodities had witnessed a decrease, due to the lethargic global economic growth. Here’s a closer look at some of the best and worst investment ideas for this year.
Residential housing& rental properties – BEST
One of the best and most sensible type of investments has always been owning & renting property. Residential housing has managed to keep pace with inflation, and surprisingly it has appreciated with roughly 4% per year. A basic plan of investment is to finish up paying out your home mortgage. Make it yours 100% and then decide what to do with it. Whether you want to rent it or sell it, that’s entirely up to you.
If you don’t want to sell property, you can turn to renting property. They say Americans are the best at evaluating rentals. Hence, this type of investment makes sense. Rental property is not for light-hearted individuals; you must be willing to kick out bad tenants, and for that you need a strong, decisive personality.
Mutual funds – BEST
Mutual funds are meant to seem attractive, and if you can afford to take a risk, this type of investment can bring significant returns. Mutual funds are sensible because they permit small incremental investments; furthermore, they allow great flexibility throughout fund shifting between a wealth of investment assets; above everything else, they offer professional investment management.
Bank loan funds – BEST
Also known as exchange-traded funds (ETFs), bank-loan funds are mutual funds meant for highly-leveraged companies with ratings that are below-investment-grade, in order to make yields appealing. Payout rates fluctuate, so if there’s an appreciation in interest rates, then the payouts will also appreciate.
There’s a bit of risk involved, too. It usually happens when a fund’s loans experience low ratings. This means that the loans are insured, but if the whole company goes into bankruptcy, you may lose your investment. If you want to invest, do it wisely. Opt for an open-end mutual fund and not for a closed-end fund; open-end funds feature a lot more liquidity.
Wine investments – BEST
Investing in wine can be a smart idea, however, it’s not for everyone. Experts point out that if you’re not a wine lover, you can’t make it in this business. How can you invest in something that you don’t like? A fine wine as an investment should be done by the book. Get to know the market first; stick to wines with a solid background and don’t hesitate to ask for advice from a reputable wine merchant. Last but not least, be ready to wait 5 – 10 years before you can see any returns. It looks like a lot of work, but this type of investment can be extremely profitable in time.
Commodities – WORST
Due to a low inflation, commodities are a bad investment idea for this 2014. In order to boost their prices, there needs to be a rising demand. Unfortunately, the global economic growth is not strong enough at the moment.
Hedge funds – WORST
The main idea behind hedge funds is capital protection. Although this type of investment seems tempting, it does come with a lot of risk. Portfolio managers place bets and they estimate if prices will drop or increase; they use borrowed money as leverage to amplify returns. The principles is to hedge against the market and predict its declines. There are chances for positive returns, however, not many people are willing to take such huge risks.
There’s a wealth of investment types out there. Whether you’re an entrepreneur with lots of experience in the business domain, or a retiree with no experience at all, the best advice is to start small. Begin with low-risk investments, talk to a financial advisor, and be willing to take some risks in order to succeed.
Sean Cooper is the bestselling author of the book, Burn Your Mortgage: The Simple, Powerful Path to Financial Freedom for Canadians, available now on Amazon and at Chapters, Indigo and major bookstores, and as an Audiobook on Amazon, Audible and iTunes.